Three ways to improve your SMSF right now

As you plan for retirement, there’s a lot to consider – so it’s important to make every decision count.

By the time you turn 50, you’re well-established and thinking about how you’re going to spend your retirement. However, as your focus shifts from career to life after work, it’s important to review your wealth strategy, because some of the most beneficial decisions you can make about your self managed super fund (SMSF) can be in the 10–15 years leading up to retirement.

Here are a few things for you to think about.

Revise your asset allocations

By now your fund’s investment strategy is more likely oriented towards preserving and protecting your capital. With interest rates at historic lows and shares delivering their worst annual performance since 20121, it’s important to review your underlying asset allocations and to diversify your portfolio – potentially reducing the level of risk currently associated with Australian equities. If you’re heavily invested in Australian shares, you should consider seeking advice on alternative assets – for example, infrastructure or commercial property, which can be less volatile than shares but may offer better returns than cash.

As you approach retirement, the impact of a bad year of investing can be more detrimental because you have less time to recover – a loss of 10% at 50 years, when your capital is substantial and you have less time to accumulate, would have a far greater impact than the same loss at 30 years, when you have more time to re-build your capital. While no investment is without risk, you can help minimise the impact of volatility by reviewing your asset allocations regularly.

Consider making an after-tax contribution soon

Pre-retirement is typically a time when people make contributions to super in order to capitalise on the tax incentives available. If you were thinking of making a large contribution, you should assess whether it would be more beneficial to make a contribution sooner rather than later.

Recent revisions of the legislation, which will take effect on 1 July 2017, will see a reduction in the annual non-concessional (after-tax) contribution limit to $300,000 under the three-year bring forward provision2. This will only be available for people with a super balance less than $1.6 million. Those with a super balance above $1.6 million will no longer be eligible to make non-concessional contributions.

The good news is that these rules will only come into effect on 1 July 2017, which means that you have a small window to use the existing non-concessional contribution rules of up to $180,000 per annum or $540,000 using the three-year bring forward provision. These limits are available to everyone below age 65. Read more about opportunities available this financial year.

Release some of the burden

As an SMSF trustee you are already familiar with the advantages an SMSF offers – full control over your retirement savings and the flexibility to tailor your portfolio as you choose. However, SMSFs can also be time intensive and require ongoing dedication and expertise, with the latest super reforms being a good example of the growing complexity of doing it yourself. As your focus starts to shift towards other priorities, you may like to think about outsourcing some of your fund’s management in order to free up your time.

An SMSF support service can provide you with expert advice and provide partnership in the management of your investments, compliance and paperwork – as and when you need it, providing you with the best of both worlds – the flexibility and control over your wealth management strategy, and more time to do the things you love.


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Want to learn more about super?

Whether you’ve had the same super fund or investment structure in place for some time, your personal circumstances and balance may have changed – which is why it makes sense to review your arrangements. But where do you start? By using our simple guide, we show you five key areas you should consider when comparing options, which can help make it easier to make a more informed choice about your super and determine the most appropriate solution for you.

Download our guide to review and compare your super

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Ashley Woodhead

Executive Director, Family Wealth Management

Ashley Woodhead is an Executive Director in the Melbourne Office and has a thorough understanding of the comprehensive services Dixon Advisory offers.

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